Inflation seen settling at 27.1% in 2025 on lower petrol price, FX stability

Inflation is expected to reduce to 27.1 percent in December 2025 driven by the normalisation of petrol prices, improved exchange rate stability, better fiscal management, and increased agricultural output.

This is according to NESG-Stanbic IBTC Business Confidence Monitor (BCM), a flagship survey-based report of the Nigerian Economic Summit Group (NESG), supported by Stanbic IBTC.

“We expect headline inflation to remain sticky in 9M:25 but settle below 30.0 percent from September 2025 as high petrol cost gets smoothened out of the year-on-year headline inflation, barring any unexpected negative shocks to petrol prices,” the report said.

“This expectation, in addition to our prognosis on the USD/NGN pair, fiscal deficits, and food supplies, informs our forecast that the headline inflation may average 30.5 percent y/y in 2025 and settle at 27.1 percent by December 2025,” it said.

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The report stated that inflationary pressures were particularly pronounced in 2024, following the removal of fuel subsidies and the liberalisation of the foreign exchange market. However, it projects a gradual easing of inflationary pressures in 2025.

It forecasts that headline inflation will remain elevated during the first nine months of the year but will decline significantly in the fourth quarter.

The report said as a result, the current Business Performance Index for December 2024 stands at +0.77, reflecting a rise in business activities and a moderate improvement compared to -2.74 in November 2024.

“Businesses faced significant growth challenges this month, with inadequate power supply, insecurity, limited access to financing, and the complexity of multiple tax regulations topping the list,” it stated.

The report noted that businesses anticipate improvements in general business conditions, exports, production levels, and cash flow. “Additionally, demand conditions and investment are expected to improve, driven by new activities typically associated with the start of a new business year.

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“The overall outlook across the five economic sectors covered is optimistic, albeit to varying degrees. While two sectors (non-manufacturing industries and agriculture) exhibited moderate optimism, others showed stronger or weaker confidence levels,” it stated.